My husband and I both have odd life insurance policies. They are considered term policies because they do expire, but as long as we don’t die, we get all our premiums back at the end. It was a new type of product they were offering. Since we are young (25) we thought it was a good idea because basically when we turn 45 we get all that money back to do with as we please.
Anyways, what if AIG can’t pay us back in 20 years…?
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What will happen to my life insurance policy if AIG goes down?
girlxstereotype 1:05 pm on March 14, 2010 Permalink
Almost every state has a "guaranty association" or "guaranty fund" that handles insurance bankruptcies much like the FDIC handles bank failures. Guaranty funds pay your claims up to a certain limit, usually $300,000 for home, auto, and life insurance policies, if your insurer becomes insolvent. That level of coverage is more than enough for the average consumer’s insurance claim.
Rest assured that you’re probably still covered. Fortunately, in most cases, you are not burdened with paperwork if your insurer has gone bust. A defunct company will send you a letter soon after it has been placed under regulatory control, and you also will be contacted by the insurance company’s rehabiltator and your state’s guaranty association. If your company does not notify you of its insolvency, you can call the company, your state guaranty association, or your state’s department of insurance (DOI) for instructions on what to do.
You will receive forms and documents in the mail that you should fill out and return according to the instructions. These documents may include forms to help move your policy to another insurance company.
While state guaranty funds try to pay claims as quickly as possible, payments might be made more slowly than usual if the court system gets involved in the administration of the liquidated company.
If you filed a claim prior to your company becoming insolvent, your claim should still be paid.
dlmrgnk 1:05 pm on March 14, 2010 Permalink
Talk to your state insurance commissioner’s office. There are supposed to be funds in each state to cover such things. Me? stop paying them and put your money into an IRA with a conservative mutual fund.
Becky D 1:05 pm on March 14, 2010 Permalink
I work for a bank and I sell AIG products all I can tell you is that as of right now we are no longer selling what they offer until further notice. They haven’t given us much to go on yet. You might want to look over your policy to make sure it is guaranteed.